Do Good Institutions Promote Countercyclical Macroeconomic Policies?
Klaus Schmidt-Hebbel; César Calderón; Roberto Duncan.
Oxford Bulletin of Economics and Statistics, Vol 78, Issue 5, 650–670, 2016
The literature has argued that developing countries are unable to adopt countercyclical monetary and fiscal policies due to financial imperfections and unfavorable political-economy conditions. Using a world sample of 115 industrial and developing countries for 1984-2008, we find that the level of institutional quality plays a key role in countries’ ability to implement counter-cyclical macroeconomic policies. The results show that countries with strong (weak) institutions adopt counter- (pro-) cyclical macroeconomic policies, reflected inextended monetary policy and fiscal policy rules. The threshold level of institutional quality at which monetary and fiscal policies are a-cyclical is found to be similar.
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Etiquetas: economías en desarrollo, instituciones, política fiscal, política monetaria, políticas macroeconómicas contracíclicas